INVESTOPEDIA: Are U.S. Colleges Still A Good Investment?

Career College Central Summary:

  • For decades, there’s been an unwritten rule that if you want a good job, you need a diploma from a four-year college. But with the cost of a post-secondary education continuing to outpace inflation year after year, students and their parents may want to pay extra attention to how they go about getting one.
  • For the 2014-2015 academic year, the average tuition cost for out-of-state students at a four-year public college will be $22,958, according to the College Board. The tab is even steeper at a private institution, with tuition set to exceed $31,000 on average.
  • Applicants can add to that the charge for room and board – typically around $10,000 to $11,000 – and a litany of other expenses, such as books and transportation.After four years, students can easily rack up more than $100,000 in expenses to obtain a degree. 
  • Watch Where You Go

    • All colleges aren't the same, of course; college costs differ widely depending on what kind of college the student attends (see chart below). Among four-year colleges, in-state public tuition is the least costly. Two-year, in-district schools cost even less.
  • Still Worth It?

    • If it seems like the price of a college education is spiraling out of control, it’s not an illusion. Over the past three decades, college costs have risen roughly 7% a year, creating a financial burden many former students find hard to escape. According to one analysis, the cost of attending a university has jumped nearly 500% since 1985. That far exceeds the rate of growth for other expenditures. In fact, the consumer price index  increased just 115% during this same period. 
    • Keep in mind that there are ways to keep costs down. About two-thirds of enrollees receive at least some discount on their tuition bill in the form of grants. And, on average, students pay less than half of the tuition and fees of a private institution if they choose to attend a public university in their home state. See 5 Ways To Get Maximum Student Financial Aid.
    • Even so, going to college these days is a major financial commitment for most. Students are relying more than ever on loans to help make college possible. According to The Institute for College Access & Success, the average university student graduated with $29,400 of debt in 2012. See All About Student Loans and Top Student Loan Providers 
    • Is the expense of getting a degree still worth it? In most cases, yes. The median annual wage for a young adult with a college degree was $46,900 in 2012, compared to just $30,000 for one with only a high school diploma. Over the course of a career, that salary differential will more than make up for the high cost of going to college.
  • For-profits: Costlier Than They Look

    • One of the most significant trends in higher education has been the growth of for-profit schools. These organizations account for 42% of college students over the past 10 years.
    • With an average tuition of $15,230, for-profits can look cheap compared to traditional four-year colleges and universities. But upon closer examination, they’re not always the bargain they appear. Often, they offer one- and two-year programs, at much higher cost than your average two-year technical school.
    • Some critics also contend that students have a harder time finding employment post-graduation. For instance, a study from the National Bureau of Economic Research found that graduates of a for-profit institution are approximately 22% less likely to get callbacks from a job application compared to those who graduated from public colleges and universities. 
    • The lesson: Do your homework before choosing this alternative to a traditional school. And always make sure you’re doing a true apples-to-apples comparison when looking at cost.

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INVESTOPEDIA

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